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There was a whole lot of hype after “Cannabis 2.0” happened in Canada in October 2019. It marked the second wave of recreational marijuana legalization in Canada. Cannabis 2.0 included cannabis derivatives products — namely cannabis-infused edibles, chocolates, beverages, vapes, and concentrates — while Cannabis 1.0 in October 2018 only legalized cannabis flowers and buds.

Cookies and coconut brownies with cannabis leaf and sign saying Edibles

Image source: Getty Images.

While all marijuana companies ramped up production to grab the opportunities of this new market, Canopy Growth (NYSE:CGC) and Organigram Holdings (NASDAQ:OGI) have focused on providing the most innovative products to consumers. Surprisingly, while the COVID-19 pandemic has forced many to focus on conserving cash, these two are moving ahead with the launch of more derivatives products for this year.

A Deloitte research paper, “Nurturing New Growth,” stated that the potential for Cannabis 2.0 products could be huge — bringing in close to 2.7 billion Canadian dollars annually, with edibles worth CA$1.6 billion alone. The article stated: “Cannabis 2.0 will undoubtedly be a ‘slow burn’ at first, but as more products become available we’re confident it will catch fire and gain momentum. Cannabis 2.0 will position Canadian companies and talent for global growth — even as the US market gains momentum.”

Organigram: First to launch Cannabis 2.0 products

Organigram marked its name as an early mover with Cannabis 2.0 products when it launched its first batch of vape cartridges, Flicker and Trailblazer Spark, in December 2019. It continued with the launch of Edison + PAX Era distillate vape cartridges in the second quarter of 2020.

In April, it announced the launch of Trailer Park Buds, a recreational use consumer brand tied up with a license agreement with the company behind the Canadian Trailer Park Boys TV show. Two strains of dried cannabis will be sold — specifically Itodaso Indica and Two Birds Sativa.

Organigram takes pride in its years of research to develop an organic cannabis products line, ANKR Organics. The line will probably be released in select markets — most probably by the third quarter of fiscal 2020 because of COVID-19.

In May, Organigram offered some of its Cannabis 2.0 recreational products as medical cannabis offerings. As it states, medical cannabis consumers now have access to “ready-to-use Edison Cannabis Company (Edison) vape pens powered by Feather; Edison-branded pods specifically for PAX Era vaporizers; and Edison Bytes chocolates in dark and milk chocolate, in both one and two pack formats.”

Its commitment to providing consumers with high-quality products is evident from its CA$15 million investment in a high-speed, high-capacity, and fully automated chocolate manufacturing line.

The popularity of its Cannabis 2.0 products is clear from its revenue growth in the second quarter, during which the already launched products made up 13% of net revenue.

Canopy Growth continues its Cannabis 2.0 products expansion amid crisis

Canopy Growth disappointed investors with its fourth-quarter fiscal 2020 results — especially after Aurora Cannabis, to everyone’s surprise, reported a good third quarter. Canopy’s Q4 revenue of CA$107.9 million missed revenue estimates by a huge margin but was up 15% year over year. Earnings before income, tax, depreciation, and amortization (EBITDA) losses of CA$102 million also came in higher than expected.

Despite a not-so-good quarter, Canopy continues with its expansion plans. With Constellation Brands backing it, the company looks ready to survive the current COVID-19 crisis — while continuing to make long-term growth plans. This puts Canopy in a safe spot compared to its peers. 

Canopy’s products are pleasing consumers

On May 12, the company announced an update on the rollout of its new cannabis-infused beverages, chocolates, and vape products over the coming months. For starters, it shipped its ready-to-drink cannabis-infused beverages — Tweed Houndstooth & Soda and Tweed Bakerstreet & Ginger — in March and April. These one-of-a-kind drinks are the first tetrahydrocannabinol (THC)-infused ready-to-drink beverages introduced to Canadian cannabis consumers. They have garnered some positive customer reviews, and management expects cannabis beverages to be a “game-changer” for the industry.

The market was be introduced to two additional beverages — Houseplant Grapefruit and Deep Space — in May and June.

Consumers have been gobbling up Canopy’s four premium THC-infused chocolate bars — namely Tokyo Smoke Pause, Tokyo Smoke Go, Tweed Houndstooth & Mocha, and Tweed Bakerstreet & Peppermint — launched in early 2020. Some innovative vape products also began to be sold at the start of 2020 — Tokyo Smoke Luma, JUJU Power, Tweed Houndstooth, Tweed Bakerstreet, and Tweed Indica — with Tweed Sativa to soon enter the market.

Two strong players in the cannabis space

Recently, Canopy Growth amended its acquisition deal with Acreage Holdings. Canopy’s CEO believes U.S. legalization may occur in 2022, and this deal will help Canopy spread its roots in the U.S. and capture a huge chunk of market share. The amendment reflected the struggles of the cannabis industry, which has affected most pot stocks’ performance in June. Shares of Canopy Growth, Acreage, and Organigram fell by 1.9%, 17.7%, and 14.2%, respectively, in June, while the SPDR S&P 500 saw slight gains of 0.92%.

Looking at their interesting and innovative product portfolios, strong balance sheets, and expansion plans, I have no reason to doubt that Canopy Growth and Organigram will prove to be beneficial stocks when the cannabis industry finally thrives. 

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